Pump prices are finally heading in the opposite direction.
The average Bay State gas price has dropped 9 cents in a week amid rising optimism that the U.S. and Iran are edging closer to a peace deal that would reopen the Strait of Hormuz.
Gas prices have now fallen for 11 straight days — but remain about 45% higher than when the war started.
On Monday, the average gas price in Massachusetts was down 9 cents from last week ($4.48), averaging $4.39 per gallon.
Monday’s price was 16 cents higher than a month ago ($4.23), and $1.39 higher than this day last year ($3).
“Northeast drivers are seeing signs of relief at the pump, but gas prices are still higher than they were a month ago and significantly higher than this time last year,” said Mark Schieldrop, senior spokesperson for AAA Northeast.
“Prices are likely to remain elevated until a long-term peace deal is reached and the Strait of Hormuz fully opens,” he added.
Massachusetts’ average gas price is 7 cents higher than the national average of $4.32 per gallon.
The national average is down 18 cents from last week ($4.50).
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Hopes for an end to the 14-week conflict have been building over the past two weeks, leading to solid price declines across oil and gas markets.
Last week, crude prices settled about 10% lower for the week and about 18% lower to close out the month of May — spurring the largest weekly drop in gas prices since the war began.
As cheaper oil eases pressure on gas prices, narrowing supplies and solid demand over the Memorial Day holiday are tempering the pace of recent price declines.
Demand last week jumped by 489,000 barrels a day to reach 9.25 million barrels a day, according to the Energy Information Administration (EIA). That number is 196,000 barrels a day lower than the comparable week last year, as cool and rainy weather may have dampened fuel sales, particularly in the Northeast.
Demand remains strong, though, and coupled with high exports, led to a 15th straight week of shrinking inventories, which fell by 2.6 million barrels last week, according to the EIA. Stockpiles are now 6% below the five-year average, and are beginning to raise concerns about supply tightness as the summer approaches.
Even with U.S. gasoline production ramping up to 9.93 million barrels a day — the highest level in five weeks — supplies are steadily decreasing as both foreign and domestic demand for U.S. gasoline is outpacing production.
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